Contractors Must Take Ownership of Export Control Compliance

By Bombach, Kara M.; Jack, William M. | National Defense, September 2010 | Go to article overview

Contractors Must Take Ownership of Export Control Compliance


Bombach, Kara M., Jack, William M., National Defense


* A recent change to the Defense Federal Acquisition Regulation Supplement (DFARS) provides an important reminder that all Defense Department contractors and subcontractors must implement effective export controls compliance programs to meet government contracting requirements.

Even without a DFARS clause mandating this obligation, contractors for decades have borne the burden of export control law compliance.

The new DFARS clause (DFARS 252.204-7008), Export-Controlled Items (April 2010), requires a single export controls clause in all DoD solicitations and contracts, thereby eliminating what was a two-clause approach, under which the department opted between one of two clauses depending on whether the contractor was projected to generate or require access to export-controlled items during contract performance.

The new clause requires compliance, among other things, with "all applicable" export laws and consultation with proper U.S. government export authorities for any export compliance questions. The "proper authorities" include the Department of State, the Directorate of Defense Trade Controls for questions on defense articles and defense services under the International Traffic in Arms Regulations (ITAR), and the Department of Commerce, Bureau of Industry and Security for questions on commercial or dual-use items under the Export Administration Regulations.

Prime contractors must include the clause in all subcontracts--including a flow-down requirement--so the DFARS clause and all relevant export control laws cover lower tiered subcontractors and suppliers as well.

The single-clause approach has garnered both criticism and praise from the contractor community. Praise comes from Defense Department contractors who appreciate the one-clause approach as it aptly reminds contractors of existing obligations to comply with export control laws, while respecting limits of department input on export control law applicability.

Specifically, it eliminates potential ambiguities in the enforcement and interpretation of export control laws by clarifying Defense is not an arbiter. Defense Department research and development contractors, in contrast, are concerned that a single clause fails to surface department expectations as to whether the contract would generate or require access to export-controlled items during contract performance.

Some contractors would prefer that Defense specify applicable export laws, especially if the government is furnishing technical data, or requiring contractor research that might exceed the scope of "basic" or "fundamental" research as defined in the ITAR.

The DFARS clause is silent as to Defense's views on applicable export control laws, rendering it crucial that contractors properly self-classify items, technology and services on each department procurement. …

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